Yahoo! Files Advertising Lawsuit Against Facebook

Lawyers for Yahoo, in a complaint filed today in federal
court in San Jose, California, seek a court order barring Facebook from
infringing 10 patents and awarding it triple damages. The patents cover website
functions such as advertising, privacy protection, information customization,
social networking and messaging, according to the complaint.

Yahoo, owner of the most popular U.S. Internet portal,
said in February that Facebook must license its technology, pointing out that
other Web companies have licensed its intellectual property. Yahoo is looking
for ways to revive growth after losing ground to Facebook in the display
advertising market and trailing Google Inc. in Web searches.

“For much of the technology upon which Facebook is based,
Yahoo! got there first,” according to the complaint. “Facebook’s entire social
network model, which allows users to create profiles for and connect with,
among other things, persons and businesses, is based on Yahoo!’s patented
social networking technology,” Yahoo said in the complaint.

Yahoo lost its No. 1 spot to Menlo Park, California-based
Facebook last year in the U.S. market for display advertising, which includes
video and graphically based marketing messages, according to EMarketer Inc. In
January, Yahoo, based in Sunnyvale, California, reported fourth-quarter revenue
of $1.17 billion, excluding sales passed on to partner sites. That fell short
of analysts’ estimates of $1.19 billion.

‘Longtime’ Partner

“We’re disappointed that Yahoo, a longtime business
partner of Facebook and a company that has substantially benefited from its
association with Facebook, has decided to resort to litigation,” Facebook said
in a statement.

“Once again, we learned of Yahoo’s decision simultaneously
with the media,” Facebook said. “We will defend ourselves vigorously against
these puzzling actions.”

Yahoo said in an e-mailed statement that its patented
technologies attract more than 700 million unique visitors each month.

“Unfortunately, the matter with Facebook remains
unresolved and we are compelled to seek redress in federal court,” Yahoo said
in the statement. “We are confident that we will prevail.”

The case is Yahoo! Inc. v. Facebook, 12-cv-01212, U.S.
District Court, Northern District of California (San Jose).